Statement of Allegations: In The Matter of Price Warner Securities Ltd. et al.

IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c. S.5, AS AMENDED

AND

IN THE MATTER OF
PRICE WARNER SECURITIES LTD., IAN ROLIN AND LORNE ROLIN

STATEMENT OF ALLEGATIONS OF STAFF OF THE ONTARIO SECURITIES COMMISSION

Staff of the Ontario Securities Commission ("Staff") make the following allegations:

1. The Respondent, Price Warner Securities Ltd. ("Price Warner"), is, and was at all materialtimes, registered under Ontario securities law as a securities dealer. The Respondent IanRolin is, and was at all material times, registered under Ontario securities law and is thePresident, compliance officer and a director of Price Warner. The Respondent Lorne Rolinis, and was at all material times, registered under Ontario securities law and is an officer ofPrice Warner.

2. During the period from 1996 to 1999 (the "material time"), virtually all of Price Warner'sbusiness consisted of it acquiring stock for its own account and selling that stock to its clients(referred to below as "principal trading").

3. During the period from 1996 to 1999, approximately 90% of Price Warner's revenue wasderived from principal trading in the stock of thirteen issuers (the "Thirteen Issuers"),referred to below, all of which traded on the Canadian Dealing Network Inc. (the "CDN").As outlined below, in the case of eleven of the Thirteen Issuers, Price Warner, or PriceWarner together with another securities dealer, accounted for more than 93% of the reportedtrading of stock of the Thirteen Issuers on the CDN. The Thirteen Issuers are as follows:

1. Active Control Technology Inc.
2. AMT Fine Foods Ltd.
3. Champion Gold Resources Inc.
4. CTM Cafés Inc.
5. Forsys Corporation
6. Gemstar Communications Inc.
7. GolfNorth Properties Inc.
8. Infolink Technologies Ltd.
9. Microlab Online Inc.
10. Partner Jet Corp.
11. Racad Technologies Ltd.
12. SFP Communications Group Inc.
13. Triangle Multi-Services Corporation

3. In the case of the Thirteen Issuers, Price Warner either held stock in its inventory or hadexercised option agreements to acquire the stock in the issuer immediately prior to thecommencement of principal trading in the stock with clients. Price Warner acquired stockin the Thirteen Issuers at prices significantly lower than the selling price to its clients. PriceWarner re-sold the stock to its own clients at mark-ups above acquisition costs ranging from112% to 574%, which mark-ups were excessive.

4. During the material time, Price Warner's gross revenue (i.e., revenue from sale of stock lessacquisition costs) earned from principal trading in the stock of the Thirteen Issuers wasapproximately $26.4 million.

5. Particulars of the principal trading in the Thirteen Issuers by Price Warner are set out inSchedule "A" attached.

Conduct of the Respondents Contrary to the Public Interest

6. In engaging in the conduct described above, the respondents may have failed to deal fairly,honestly and in good faith with their clients and may not have acted in the best interests oftheir clients, and acted contrary to the public interest. The respondents, Lorne Rolin and IanRolin, authorized, permitted or acquiesced in the contraventions by Price Warner, asdescribed above, and acted contrary to the public interest.

7. Such additional allegations as Staff may make and the Commission may permit.

SCHEDULE "A"

RE: STATEMENT OF ALLEGATIONS - PRICE WARNER

Active Control Technology Inc. ("Active")

1. Active is a reporting issuer in Ontario. During the period from May 29, 1997 to March 20,1998, Price Warner acquired approximately 1,650,000 shares of Active at a weighted averagecost of $0.43 per share pursuant to certain option agreements.

2. During the period from May 14, 1997 to December 16, 1999, Price Warner sold substantiallyall of its shares in Active to its own clients at a weighted average price of $1.70 per share,generating a gross profit to it of approximately $2.3 million. The term "weighted averageprice", as referred to hereafter, is defined as the total dollar value of shares purchased by allclients, divided by the total number of shares purchased by all clients, excludingcancellations and reversals of trades. During this time, Price Warner accounted forapproximately 58% of the reported trading of Active shares, while another securities dealeraccounted for approximately 42% of the reported trading of Active shares.

3. Price Warner sold Active shares to its clients at a mark-up of approximately 295%, whichmark-up was excessive. Active last traded on June 30, 2000 at $0.10.

AMT Fine Foods Ltd. ("AMT")

4. AMT is a reporting issuer in Ontario. During the period from February 26, 1998 toSeptember 24, 1998, Price Warner acquired approximately 1,680,000 shares of AMT at aweighted average cost of $0.77 per share pursuant to certain option agreements.

5. During the period from February 16, 1998 to December 26, 1999, Price Warner soldsubstantially all its shares in AMT to its own clients. Price sold the shares at a weightedaverage price of $1.63 per share, generating a gross profit to it of approximately $2.2 million.During this time, Price Warner accounted for approximately 67% of the reported trading ofAMT shares while another securities dealer accounted for approximately 33% of the reportedtrading of AMT shares.

6. Price Warner sold AMT shares to its clients at a mark-up of approximately 112%, whichmark-up was excessive. AMT last traded on June 28, 2000 at $0.02.

Champion Gold Resources Inc. ("Champion")

7. Champion is a reporting issuer in Ontario. During the period from July 8, 1997 to March 4,1999, Price Warner acquired approximately 1,150,000 shares of Champion at a weightedaverage cost of $0.30 per share pursuant to certain option agreements.

8. During the period from July 15, 1997 to May 31, 1999, Price Warner sold substantially allof its Champion shares to its own clients at a weighted average price of $1.47 per share,generating a gross profit to it of approximately $1.4 million. During this time, Price Warneraccounted for approximately 54% of the reported trading of Champion shares, while anothersecurities dealer accounted for approximately 42% of the reported trading of the Championshares.

9. Price Warner sold Champion shares to its clients at a mark-up of approximately 390%, whichmark-up was excessive. Champion last traded on June 13, 2000 at $0.02.

CTM Cafés Inc. ("CTM")

10. CTM is a reporting issuer in Ontario. During the period from September 11, 1998 to June23, 1999, Price Warner acquired approximately 1,380,000 shares of CTM at a weightedaverage cost of $0.38 per share pursuant to certain option agreements.

11. During the period from September 11, 1998 to October 27, 1999, Price Warner soldsubstantially all of its CTM shares to its own clients at a weighted average price of $2.26 pershare, generating a gross profit of approximately $2.7 million. During this time, PriceWarner accounted for approximately 60% of the reported trading of CTM shares, whileanother securities dealer Limited accounted for approximately 40% of the reported tradingof CTM shares.

12. Price Warner sold CTM shares to its clients at a mark-up of approximately 495%, whichmark-up was excessive. CTM last traded on July 5, 2000 at $0.05.

Forsys Corporation ("Forsys")

13. Forsys is a reporting issuer in Ontario. During the period from January 10, 1997 toNovember 25, 1997, Price Warner acquired 2,196,607 shares of Forsys at a weighted averagecost of $0.40 per share pursuant to certain option agreements.

14. During the period from December 17, 1996 to August 14, 1998, Price Warner soldsubstantially all of its Forsys shares to its own clients at a weighted average price of $1.66per share, generating a gross profit of approximately $3 million. During this time, PriceWarner accounted for approximately 49% of the reported trading of Forsys shares, whileanother securities dealer accounted for approximately 48% of the reported trading of Forsysshares.

15. Price Warner sold Forsys shares to its clients at a mark-up of approximately 315%, whichmark-up was excessive. Forsys last traded on June 6, 2000 at $0.02.

Gemstar Communications Inc. ("Gemstar")

16. Gemstar is a reporting issuer in Ontario. During the period from April 8, 1996 to June 28,1996, Price Warner acquired approximately 1,650,000 shares of Gemstar at a weightedaverage cost of $0.43 per share pursuant to certain option agreements.

17. During the period from March 26, 1996 to June 23, 1999, Price Warner sold substantially allof its Gemstar shares to its own clients at a weighted average price of $1.52 per share,generating a gross profit of approximately $2 million. During this material time, PriceWarner accounted for approximately 23% of the reported trading of Gemstar shares, whileanother securities dealer accounted for approximately 42% of the reported trading of Gemstarshares.

18. Price Warner sold Gemstar shares to its clients at a mark-up of approximately 253%, whichmark-up was excessive. Gemstar last traded on July 5, 2000 at $0.30.

GolfNorth Properties Inc. ("GolfNorth")

19. GolfNorth is a reporting issuer in Ontario. During the period from May 6, 1998 to May 17,1999, Price Warner acquired 1,922,000 shares of GolfNorth at a weighted average cost of$0.34 per share.

20. During the period from March 28, 1998 to August 31, 1999, Price Warner sold substantiallyall of its GolfNorth shares to its own clients at a weighted average price of $2.29 per share,generating a gross profit of approximately $3.5 million. During this time, Price Warneraccounted for approximately 66% of the reported trading of GolfNorth shares, while anothersecurities dealer accounted for approximately 31% of reported trading of GolfNorth shares.

21. Price Warner sold GolfNorth shares to its clients at a mark-up of approximately 574%, whichmark-up was excessive. GolfNorth last traded on July 5, 2000 at $0.30.

Infolink Technologies Ltd. ("Infolink")

22. Infolink is a reporting issuer in Ontario. During the period from September 15,1999 toDecember 31, 1999, Price Warner acquired 2,200,000 shares of Infolink at a weightedaverage cost of $0.25 per share pursuant to certain option agreements.

23. During the period from August 31, 1999 to December 31, 1999, Price Warner soldsubstantially all of its Infolink shares to its own clients at a weighted average price of $0.75per share, generating a gross profit of approximately $700,000. During this time, PriceWarner accounted for approximately 100% of the reported trading of Infolink shares.

24. Price Warner sold Infolink shares to its clients at a mark-up of approximately 200%, whichmark-up was excessive. Infolink last traded on July 5, 2000 at $0.55.

Microlab Online Inc. ("Microlab")

25. Microlab is a reporting issuer in Ontario. During the period from July 7, 1999 toDecember 2, 1999, Price Warner acquired 1,600,000 shares of Microlab at a weightedaverage cost of $0.28 per share pursuant to certain option agreements.

26. During the period from July 7, 1999, to December 29, 1999, Price Warner sold substantiallyall of its Microlab shares to its own clients at a weighted average price of $1.05 per share,generating a gross profit of approximately $1 million. During this period, Price Warneraccounted for approximately 81% of the reported trading of Microlab shares, while anothersecurities dealer accounted for approximately 18% of the reported trading of Microlab shares.

27. Price Warner sold Microlab shares to its clients at a mark-up of approximately 275%, whichmark-up was excessive. Microlab last traded on July 5, 2000 at $0.36.

Partner Jet Corp. ("Partner")

28. Partner is a reporting issuer in Ontario. During the period between November 28, 1997 toDecember 4, 1998, Price Warner acquired approximately 1,066,128 shares of Partner at aweighted average cost of $0.60 per share pursuant to certain option agreements.

29. During the period from October 21, 1997 to December 20, 1999, Price Warner soldsubstantially all of its Partner shares to its own clients at a weighted average price of $1.86per share, generating a gross profit of approximately $1.5 million. During this time, PriceWarner accounted for approximately 47% of the reported trading of the Partner shares, whileanother securities dealer accounted for approximately 53% of the reporting trading of Partnershares.

30. Price Warner sold Partner shares to its clients at a mark-up of approximately 210%, whichmark-up was excessive. Partner last traded on April 11, 2000 at $0.10.

Racad Technologies Ltd. ("Racad")

31. Racad is a reporting issuer in Ontario. During the period from July 12, 1996 to June 27,1997, Price Warner acquired approximately 2,226,000 shares of Racad at a weighted averagecost of $0.41 per share pursuant to certain option agreements.

32. During the period from June 25, 1996 to a July 7, 1998, Price Warner sold substantially allof its Racad shares to its own clients at a weighted average price of $1.64 per share,generating a gross profit of approximately $2.8 million. During this time, Price Warneraccounted for approximately 60% of the reported trading of Racad shares, while anothersecurities dealer accounted for approximately 35% of the reported trading of Racad shares.

33. Price Warner sold Racad shares to its clients at a mark-up of approximately 300%, whichmark-up was excessive.

34. Racad is no longer quoted or reportable on CDN . Racad last traded on July 7, 1998 at $0.10.

SFP Communications Group Inc. ("SFP")

35. SFP is a reporting issuer in Ontario. During the period from January 11, 1999 to January 19,2000, Price Warner acquired approximately 1,760,000 of SFP at a weighted average cost of$0.62 per share pursuant to certain option agreements.

36. During the period from January 11, 1999 to December 31, 1999, Price Warner soldsubstantially all of its SFP shares to its own clients at a weighted average price of $1.97 pershare, generating a gross profit of approximately $2.1 million. During this time, PriceWarner accounted for approximately 72% of the reported trading of SFP shares, whileanother securities dealer accounted for approximately 28% of the reported trading of SFPshares.

37. Price Warner sold SFP shares to its clients at a mark-up of approximately 213%, whichmark-up was excessive. SFP last traded on July 5, 2000 at $0.58.

Triangle Multi-Services Corporation ("Triangle")

38. Triangle is a reporting issuer in Ontario. During the period from June 13, 1996 to April 9,1997, Price Warner acquired 1,140,000 shares of Triangle at a weighted average cost of$0.45 per share pursuant to certain option agreements.

39. During the period from April 30, 1996 to December 20, 1999, Price Warner soldsubstantially all of its Triangle shares to its own clients at a weighted average price of $1.43per share, generating a gross profit of approximately $1.2 million. During this time, PriceWarner accounted for approximately 47% of the reported trading of Triangle shares, whileanother securities dealer accounted for approximately 46% of the reported trading of Triangleshares.

40. Price Warner sold Triangle shares to its clients at a mark-up of approximately 240%, whichmark-up was excessive. Triangle last traded on May 18, 2000 at $0.02.